The Goldman Sachs Group, Inc. (GS) Earnings Call Transcript & Summary

Good morning, everyone. This is David Solomon, the Chairman and CEO of Goldman Sachs. Thank you for joining us today at our Annual Shareholders Meeting. I hope everyone is staying safe and healthy. I will now call the meeting to order. Before we get to anything else, given this is our first virtual meeting, I want to quickly make sure our shareholders know how to submit questions during the meeting. I want to thank those of you who have submitted questions over the past 5 weeks via the online portal. If any shareholders have additional questions, please make sure you are logged into the meeting with your control number and submit them online now, so that we can ensure that we're able to answer them appropriately during the meeting. For the benefit of all shareholders so that it is clear who is asking a question, when you submit a question, please enter your name and your organization, if applicable, along with the text of your question. If the question relates to a proposal, please indicate so -- please indicate that so your question can be addressed at the appropriate time. Questions can be submitted until the conclusion of the presentation of proposals. I'd like to take a minute to note, as we all attend this meeting virtually today, the world is facing a global health crisis that is putting extraordinary pressure on all of society. While it remains too early to know the full impact or to predict a specific path to recovery, we are drawing upon all of our core values as a firm to take action to support our people, their families, our clients and our communities, all of which we believe will help us to continue to create enduring value for you, our shareholders. As the world grapples with this terrible pandemic, first and foremost, we are extremely grateful for the unwavering dedication of the health care specialists and other frontline workers who are bearing the greatest burden in the fight against the virus. We are in awe of and inspired by their courage. I am also enormously proud of the determination and professionalism of the people of Goldman Sachs, who have quickly adapted to this new environment and who continue to serve our clients each and every day, even as over 98% of them are currently working from home. As public policy measures to stem the pandemic take root, I know that our firm will emerge well-positioned to help our clients and communities recover. Goldman Sachs, alongside many other financial institutions, is prepared to play its part during this challenging time. We take seriously our responsibility to the broader financial system, which reflects the firm's deeply ingrained values of partnership and client service. We are harnessing our resources, experience and network to help where we can, working with public and private sector clients to partner on new initiatives with a focus on community assistance, economic support for businesses and serving our clients and customers. To date, we have taken a number of important steps, including making a $550 million commitment to COVID-19 relief efforts, which includes $500 million for small business loans and $25 million in grants to community development financial institutions. We have a long track record of reaching underserved communities and businesses. We have worked for many -- we have worked with many of these mission-driven lenders for years through our 10,000 Small Businesses program. In addition, we made a $30 million commitment through Goldman Sachs Gives to help health care workers families and the most vulnerable populations by means of a COVID-19 Relief Fund and a special employee matching gift program. As the situation evolves, we will look for additional opportunities to support the broader financial system, our people, our clients and our communities. The interest of all of our stakeholders, including you, our shareholders, remain paramount as we invest together in the future of this firm. And I'd like to personally thank you for your continued support of Goldman Sachs. Now turning to the business of the meeting. I've been advised by our independent tabulator and our inspector of election that the holders of at least 86% of our outstanding shares are present in person or by proxy and accordingly, a quorum is present. I hereby acknowledge that all matters to be voted upon as described in our proxy statement are properly before the meeting, and as such, I declare the polls on all of the proposals open. [Voting]

I'd like to take a moment to acknowledge the members of our Board of Directors, each of whom is in attendance today at this virtual meeting and to thank them for their service. Bayo Ogunlesi, our Board's Lead Director and Chair of our Corporate Governance and Nominating Committee; Michele Burns, the Chair of our Compensation Committee; Drew Faust; Mark Flaherty; Ellen Kullman, the Chair of our Public Responsibilities Committee; Lakshmi Mittal; Peter Oppenheimer, the Chair of our Audit Committee; Vice Admiral Jan Tighe; David Viniar; and Mark Winkelman, the Chair of our Risk Committee. I would also like to introduce our General Counsel, Karen Seymour, who is acting as Secretary of this meeting. In addition, from our independent auditors, PricewaterhouseCoopers, we have Paul Griggs. Finally, from American Election Services, we are joined by Christopher J. Woods, our inspector of election. We will conduct this meeting in accordance with the agenda and rules of conduct, which are available online to all of you listening to this meeting. As noted earlier, any shareholder who has logged into the meeting with a valid control number can submit questions online for us to answer and may do so until the conclusion of the presentation of proposals. Please include your name along with the text of your question. We will take any questions that relate to proposals at the end of the presentation of the 5 proposals being voted on today, and then we will provide preliminary vote results. At the end of our meeting, during our general question-and-answer session, we'll address additional questions following the procedures set forth in the rules of conduct. The polls are open and shareholders who wish to do so may cast a vote online through our virtual meeting website by following the instructions on the site. If you have voted your shares prior to the start of the annual meeting, your vote has already been received and tabulated, and there is no need to vote again unless you wish to revoke or change your vote. We will now turn to the proposals. The first matter to be voted on is the election of directors. The Board has unanimously recommended that shareholders vote for the election of each of the director nominees for the reasons set forth in the proxy statement. The second matter to be voted on is an advisory vote to approve the executive compensation of our named executive officers. The Board has unanimously recommended that shareholders vote for the say-on-pay vote for the reasons set forth in our proxy statement. The third matter to be voted on is the ratification of the appointment of PricewaterhouseCoopers as our independent auditors for 2020. The Board has unanimously recommended that shareholders vote for the ratification of PricewaterhouseCoopers for the reasons set forth in our proxy statement. The fourth matter to be voted on is a shareholder proposal submitted by John Chevedden, requesting the right to act by written consent. The Board has unanimously recommended that shareholders vote against this shareholder proposal for the reasons set forth in our proxy statement. I believe the proposal is being presented by [ Jesse Alba ] on behalf of John Chevedden, and I now ask that he be given the opportunity to present the proposal.

Thank you, and good morning. Proposal 4, right to act by written consent, sponsored by John Chevedden. Shareholders request that the Board of Directors take the necessary steps to adopt written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize an action at a meeting at which all shareholders entitled to vote thereon were present and voting. Hundreds of major companies enable shareholder action by written consent. Taking action by written consent in place of a meeting is a means shareholders can use to raise important matters outside the normal annual meeting cycle, like the election of a new director. This is important after Director Lakshmi Mittal was rejected by 18% of shareholders in 2019. In other words, Mr. Mittal received 18 times as many negative votes as each of most of the other Goldman Sachs directors. The written consent topic has been gaining support at Goldman Sachs since 2015. Meanwhile, the stock ownership threshold at Goldman Sachs to call a special shareholder meeting has long remained static in spite of 41% support to lower it to 10% as far back as 2011. This proposal topic won majority support at 13 major companies in a single year. This included 67% support at both Allstate and Sprint. Hundreds of major companies enable shareholder action by written consent. The right for shareholders to act by written consent is gaining acceptance as a more important right than the right to call a special meeting. This seems to be the conclusion of the Intel Corporation shareholder vote at the 2019 Intel Annual Meeting. The directors at Intel apparently thought they could divert shareholder attention away from written consent by making it less difficult for shareholders to call a special meeting. However, Intel shareholders responded with greater support for written consent in 2019 than in 2018. The management response to this proposal, in effect, says that since Goldman Sachs has adopted the governance practices that a lot of other companies have adopted, that is good enough. Written consent won 44% support at Capital One Financial Corporation in 2018 and this increased to 56% support in 2019. Written consent won 47% support at United Rentals in 2018, and this increased to 51% support in 2019. Please vote yes, write to act by written consent, Proposal 4. Thank you.

Thank you. The fifth matter to be voted on is a shareholder proposal submitted by Harrington Investments requesting Board oversight of the statement on the purpose of a corporation. The Board has unanimously recommended that shareholders vote against this shareholder proposal for the reasons set forth in our proxy statement. I believe the proposal is being presented by Susan Perez on behalf of Harrington Investments, and I now ask that she be given the opportunity to present the proposal.

Good morning. My name is Susan Ozawa Perez, and I'm an economist and portfolio manager at Harrington Investments. The business roundtable statement of the purpose of the corporation signed by our company marks a monumental potential shift as showing greater purpose of a firm beyond short-term shareholder primacy, recognizing all stakeholders are as important as shareholders and delivering long-term value to the company and prosperity to society. The statement has the potential to become reality if adopted as policy and stated in our company's governance documents. To be clear, the stakes cannot be higher as the COVID-19 pandemic grips through every economy on the planet, how well our company answer the call to support communities and crisis in sustainable ways. Does this mean Goldman Sachs will work with partners to leverage every faculty and dollar at its disposal to address this crisis, including provide grants and 0 interest loans from the IMF to meet $3 trillion in emergency funds needed and special drawing rights and to underwrite or provide capital for stabilizing facilities? Will Goldman reduce or eliminate dividends, stock buybacks and executive bonuses until the economy recovers? Will it expand financial assistance to communities that are most in need? Will the company subject all Goldman's operations to the principles set forth in the statement? Lastly, will our bank's fiduciaries and its governance documents specifically delineate how we'll treat all of our constituents of stakeholders, including shareholders, focusing on generating long-term social value? Shareholders recall decisions by management that stand in sharp contrast with the social priorities in the statement. Reflecting priorities, last year, Goldman spent $6.8 billion in stock buybacks and dividends and awarded CEO Solomon $27.5 billion -- $27.5 million in compensation. The company has paid over $13 billion in penalties and a great deal in legal fees for investment and lending abuses. Goldman has taken nearly $800 million from the government and nearly $950 billion in federal loans, guarantees and bailout assistance since 1997, and has evaded taxation of transactions and trades distinct from all other business services in every other industry. Further, those subsidies were gained through market concentration and purchased through lobbying and leadership in trade associations and direct opposition to civil rights groups, consumer, labor, business, investor, rate-based and civic and community groups. This year, the company has set up its own political action committee. Goldman exacts influence on the priorities of entire nations globally through its lending decisions, its underwriting and its influence on U.S. foreign policy. However, Goldman has demonstrated it can use its power and capital differently. After spending $59 billion on fossil fuel investments over the last few years, the company has recently pivoted committing $750 billion to focus on climate transition and inclusive economic growth. These resources can be front-loaded and scaled up across all of Goldman's operations to mitigate the impact of the crisis in partnership with governments, other companies and civil society. And investment banking corporate lending can be channeled to high-need, high-impact concessionary loans. In the global markets segment and throughout the company, all activities that caused fluctuations in macroeconomic and commodity prices can be responsibly unwound to support global price floors and stability in coordination with national multilateral authorities. In asset management, Goldman can crowd in investment in emerging markets and distressed issuers assets and markets, while making public commitments to retain those positions for 3 to 5 years and freezing all shorting activity. In wealth management, assets in alternatives can be wound down in opaque and exit-driven investments and steer toward those delivering on social and environmental impact. On top of the death toll, the UN World Food Program estimates that 265 million people could face starvation by the end of the year, 500 million people will be pushed into property due to the pandemic. Now is the time to build something with the global community, a repurposed institution with commitment, hard work, creativity and every faculty at our disposal commit and deliver on this statement. The world is depending on it. Thank you.

Thank you very much. Thank you. At this time, the windows to submit questions online, both with respect to the proposals as well as any general questions is closed. We have received a few questions regarding proposals that were just now presented, which will be addressed now. We have received a statement from shareholder, [ Stephen Rubenfeld ], which relates to the election of directors. The shareholder states that they will never vote for a director who serves on more than 2 other Boards and prefers candidates who are on 1 other Board. Thank you for that feedback. Our Board is quite focused on Board composition, and effectiveness and director commitment is an overall part of that. I would note that the overall attendance of Board and committee meetings during 2019 was over 99% for our directors as a group. We received a question relating to the say-on-pay vote from shareholder, [ John Smith ]. The question states, on what basis CEO, David Solomon, could have a 20% raise in compensation to $27.5 million in 2019 versus all key senior management, no matter if GS competitors or in other industries are revising their compensation down now in view of the coronavirus situation. GS stock is down 30.64% year-to-date, and the increase in compensation is unjustified. Let me turn to Michele Burns, Chairman of our Compensation Committee, who will respond to this question.

Good morning. Executive compensation is a very important responsibility for us, both at the Board and the committee level as we seek to incentivize management and align management with our shareholders. We also seek to take shareholder feedback as a valuable input into discussions. I want to set the table by first saying that let's remember that David became CEO in October of 2018, so a year-over-year comparison is very difficult. In evaluating David's pay, we first considered the compensation of peer CEOs across the industry. And we also then considered his predecessor's full year 2018 compensation. So by annualizing Lloyd Blankfein's 2018 compensation, that number would have been $27.3 million. In addition, of course, we evaluated performance and the success of the firm during 2019. I think in this context, we believe that David's compensation is appropriately aligned with his peers and with his predecessors. And importantly, I think it is important to remember that our compensation system is very rigorous, uses -- extensive use of PSUs and features such as robust transfer restrictions and share retention requirements, so that, that is aligned with shareholder value. Thank you, David.

Thank you, Michele. We received a question which relates to the shareholder proposal on the statement on the purpose of a corporation. The question asked why the firm signed it? And how Goldman is ready -- is already implementing the principles of this statement and driving shareholder value? And so I'll answer that question. I signed the business roundtable's revised statement because I believe and my fellow Board members believe that companies will be best served over the long term by building value for all stakeholders, including our clients, employees, suppliers, communities and, of course, our shareholders. This ethos is entirely consistent with where we already were managing the firm. We've taken a number of major steps recently in this vein. At our Investor Day in January, we codified our firm's stated purpose to advance sustainable economic growth and financial opportunity. If we are successful in delivering on that purpose, many stakeholder groups, including our shareholders, will benefit. We also recently announced a $750 billion sustainable finance target, created the Sustainable Finance Group and implemented a number of new diversity inclusion initiatives related to our own workforce, our vendors and our clients. Our 2019 sustainability report, which we published last week, provides detailed overview of our sustainability efforts. And I would encourage you to read it if you've not already had a chance to do so. In particular, our recent response to the COVID-19 health crisis demonstrates our commitment to serving a broad set of stakeholders, including our employees, vendors, clients and communities. We, of course, continue to be focused on driving long-term value for our shareholders. We believe that our focus on delivering value to a broad set of stakeholders best positions the firm for long-term success and, therefore, will drive greater shareholder value over time. I understand we have not received any other questions specific to the proposals being voted on. At this time, I declare the polls closed on all proposals. We've been informed by the inspector of election that we have available preliminary voting results. Karen Seymour, could I call on you to please announce them?

Yes. Thank you, David. These results are based on a preliminary estimate. Any votes cast online during the meeting remain to be tabulated, and final voting results will be provided in a Form 8-K that we will file within 4 business days of this meeting. First, I'm pleased to announce that each of the 11 director nominees received the support of a majority of our shareholders, and consequently, each has been elected. Second, the advisory vote to approve the executive compensation of our named executive officers received the support of votes representing approximately 71% of the shares present in person or represented by proxy, and consequently, is approved. Third, the proposed ratification of the appointment of PricewaterhouseCoopers as our independent auditors received the support of votes representing approximately 95% of the shares present in person or represented by proxy and consequently, is approved. Fourth, the proposal requesting the right to act by written consent received the support of approximately 41% of the shares present in person or represented by proxy and consequently, is not approved. Fifth, the proposal requesting Board oversight of the statement on the purpose of a corporation, received the support of approximately 6% of the shares present in person or represented by proxy and consequently is not approved. Thank you, David.

Thank you, Karen. We'll now turn to our general Q&A session. We'll begin with a few questions that we received in advance of today's meeting, and then we'll turn to any questions that have been submitted this morning. We received a question from shareholder, [ Corey Anderson ], who stated that after the introduction of the Apple Card, there were reports of gender discrimination with regard to the assignment of credit ratings for the card, which resulted in several bad press reports for both Apple and Goldman Sachs. Corey asked several questions, including what were the results of the company's investigations into the use of faulty algorithms employed to generate credit ratings for this and any other card that Goldman Sachs sponsors? If the application of any faulty algorithms also result in lower credit ratings being assigned to any racial or ethnic groups based on zip codes or other criteria used in credit assessments? And what were the remedies put in place to prevent such incidents from occurring in the future? First, let me reiterate, we have not and will not make decisions based on factors like gender, race or ethnicity. We have a rigorous compliance program in place to ensure that there are no inadvertent biases in our policies and that we adhere to fair lending rules prescribed by our regulators. There is no black box. We are able to identify the reason for every credit decision we make. Every Apple Card application is evaluated independently and considers an individual's income and creditworthiness, which includes factors like personal credit scores, personal debt and how that debt has been managed. Based on these individual factors, it was possible for 2 family members to receive significantly different credit decisions. We understand customers would like to share their Apple Card with family members, and to better serve their needs, we're working to build that functionality. We also received a question that asked how we were addressing the gender pay gap between men and women. Each year, we review pay equity across the firm to ensure men and women in similar roles with similar performance are paid comparably. Although our historical analysis shows women of the firm on average make 99% of what men earn, we are aware that we have an issue with underrepresentation of women at senior levels. We are extremely focused on the advancement of women and all underrepresented diverse professionals in the workplace. And more broadly, we are focused on fostering an environment and a culture of diversity and inclusion. We take a broad approach to attracting and retaining diverse talent, including the announcement of and progress towards aspirational diversity goals, robust talent development programs and diversity retention initiatives. We have previously stated our aspirational goals for analysts and entry-level associate hires, 50% women, 11% black professionals, 14% Hispanic Latin professionals in the Americas and 9% black professionals in the U.K. We believe our analysts and associates are an important starting point, but we are also committed to having women represent 50% of our global workforce over time. In 2019, we recruited, hired and promoted some of the most diverse talent to date. Our analyst class was comprised of 49% women, 16% Hispanic in the U.S., 10% black in the U.S. and 14% black in the U.K. Our 2019 summer interns were the most diverse class in our firm's history. The class comprised 54% women versus 47% in 2018. And was 28% ethnically diverse versus 26% in 2018. Our new Managing Director class was also the most diverse to date, 29% women, highest ever; 6% black, highest ever; and 2% Hispanic/Latino; and 2% LGBT. We also continue to focus on the diversity of the forward PMD pipeline 1 to 2 cycles out and have seen great momentum in the diversity of the most recent promote classes, with 2018 being the most diverse class in our partnership in which women represented 26%, up from 23% in 2016. Next is a question from Ben Cushing at the Sierra Club, which reads as follows. Last year, Goldman Sachs announced an updated environmental policy that rules out financing for new oil drilling and exploration in the Arctic, including the Arctic National Wildlife Refuge. This policy also rules out financing for new thermal coal mines and coal-fired projects worldwide, though the policy fails to go as far on fossil fuels, such as tar sands, fracking and offshore drilling. The Sierra Club commends Goldman Sachs for being the first major U.S. bank to take these critical steps forward to avoid investing in some of the most destructive fossil fuel projects on the planet. However, these actions are not enough to stop Goldman Sachs financing of fossil fuel development and to align the bank's portfolio with the goals of the Paris Agreement. We are facing a climate crisis, which, as Mr. Solomon has said before, poses serious risk to the financial system. The Banking on Climate Change 2020 report shows that Goldman Sachs is still one of the world's largest funders of fossil fuels. And although this overall funding was on the decline in previous years, it went back up again in 2019. These investments are directly fueling the global climate crisis and putting communities in danger. Goldman Sachs investments are still nowhere close to being aligned with the goals of the Paris Agreement to keep global temperature rise well below 2 degrees Celsius. So my question for Mr. Solomon and the Board is, what is Goldman Sachs' plan to phase out its investment in fossil fuels, scale up its investments into clean energy solutions and align its investment portfolio with the goals of the Paris Agreement? Thank you for that question. As a firm, we have a long track record of environmental leadership, having mobilized over $100 billion into clean energy financings and investments. We've been actively working with our clients globally on the low carbon transition. Last year, we strengthened our commitment to sustainable finance with a new target of $750 billion in financing, investment and advisory by 2030 focused on climate transition and inclusive growth. Importantly, we're actively working with our clients across all sectors globally, help their climate transition. We have worked to not only leverage existing tools, such as new green bond issuances, but also to create innovative new instruments like the ML bond, where the structure is specifically tied to the company's progress in achieving a renewable energy target as it transitions to net 0. In 2019, we also updated our environmental policy guidelines for carbon-intensive sectors where we articulate that we will not finance any new coal-powered development and will phase out financing for thermal coal mining and that we will work with clients to support their low-carbon transition. In addition, we are engaging with multiple stakeholders on climate alignment initiatives for the financial sector with a goal of understanding how best we can play a role in working with our clients for the Paris alignment. For example, we are partnering with the Rocky Mountain Institute's Center for Climate-Aligned Financial Sector. We are also committed to ongoing transparency in our reporting of these important topics. We've received several questions from our longtime shareholder, [ Mindy Wasserman ]. [ Mindy ], I'm sorry to not be able to speak with you in person this year, but glad you're able to submit questions virtually. Mindy's first question asked, 1/3 of 2Q has already been shut down. Only a couple of states are starting to reopen before May 15, which is the halfway mark for the second quarter. Please give us an update on 2Q and the second half of the year. Please include the general economy and highlights of your business. The market is a leading indicator and usually semi-efficient, so that prices reflect known information. When earnings actually decline, how much will the market be affected? Well, Mindy, we're only 1 month into the second quarter, so it's still a bit early to say how exactly the quarter will play out in its entirety. The environment obviously remains extremely fluid. Our economists continue to forecast a significant decline in GDP in the second quarter, followed by the beginning of a recovery in the second half of the year, leading to fiscal year GDP contraction of 5.7% in total and 2.7% for the U.S. and the world, respectively. While the market environment deteriorated sharply in March, we saw solid performance against several businesses, particularly in our trading markets business, which benefited from higher client activity. Markets feel better in April than they did in March, and we've seen strong issuance and activity in investment-grade bonds and higher quality, high-yield bonds as companies seek to raise liquidity. We do certainly expect corporate earnings to be impacted by the shutdowns, but this will vary across sectors and geographies, and we will continue to monitor this closely. Mindy also asked, please discuss the ramifications of oil between $20, and separately -- oil below $20. And separately, what progress is made on a replacement for LIBOR? Well, we recently saw a historic day in oil markets as the May WTI contract closed with the first negative settle ever after posting the largest 1-day sell-off ever. As storage facilities fill up, we expect price volatility to remain high in the coming weeks. With ultimately a finite amount of storage left to fill, production will need to decline to bring the market into balance, finally setting the stage for higher prices once demand recovers. We remain committed to helping our clients navigate this unprecedented environment and are managing risk with the same focus and discipline you've come to expect from Goldman Sachs. Switching gears for a moment to discuss your question on LIBOR, we remain committed to a seamless transition for our clients, the marketplace and the firm, even in the current environment. The FCA and the FSB recently announced that LIBOR transition remains a priority and the year-end 2021 deadline still holds true. We are a key industry stakeholder, are supportive of the move to the new risk-free rate benchmarks and are actively engaged with global central banks, regulators and industry working groups. We issued securities using the alternative benchmark rates, including a $1 billion SOFR-linked bond in May 2019, which received high demand. We issued 2 fixed-to-floating preferred stock deals in June and November of 2019, both benchmarked to 5-year treasury notes, when they move to floating after 2024. We fully support all the progress, and this is a critical initiative for us and our clients. Lastly, Mindy asked, please discuss the stress test and their timetable given the stress that you're currently under? Are you providing actual or hypothetical numbers given the level of unemployment and the decline in GDP, commercial real estate results and hotels, retail and office, and the possibility of a default by a counterparty, domestic or foreign? How much lower would loss provisions be without CECL? What increases do you expect? So across Goldman Sachs, our forward planning and risk management practices enable us to be well prepared, and liquidity and capital buffers we hold are intended for times like these. During the time of increased market volatility and disruption, our ability to seamlessly serve our clients while the vast majority of our employees work remotely demonstrates the dedication of our people, the strength of our engineering and business resiliency in addition to the financial standing of our organization. Our stress tests incorporate our internally designed stress scenarios, including our internally developed severely adverse stress scenario and those required under CCAR and DFAST and are designed to capture our specific vulnerabilities and risks. We are actively navigating through the current market stresses, and that is a function of the regular stress testing that we and the industry have undertaken over the past decade. Our liquidity and capital metrics are sized to withstand severely adverse scenarios. With regards to the second part of your question, Mindy, on CECL and credit provisions, looking at our first quarter results, CECL increased our provisions by approximately $150 million to $200 million. Our credit provision for the second quarter and the remainder of the year is going to depend on the economy and evolving credit trends, which we're monitoring closely. I now have a question from a shareholder. The question is in regards to the 2020 ruling by the Second U.S. Circuit Court of Appeals in Manhattan that Goldman Sachs must face a shareholder class action, accusing the bank of hiding conflicts of interest, including behind-the-scenes dealings with a prominent hedge fund manager when creating risky subprime securities before the 2008 financial crisis. How much has Goldman Sachs spent on legal bills? The lawsuit said Goldman Sachs fraudulently overstated its ability to manage conflicts, causing more than $13 billion of losses for shareholders from February 2007 to June 2010. Thank you for this question. We are seeking review in the Second Circuit, and therefore, cannot comment any further on this legal matter at this time. The next question coming from a shareholder. How many -- how are new directors selected? For this question, I'm going to turn to our Lead Director, Bayo Ogunlesi.

Thank you, David, and good morning, everyone. At the Governance Committee, the objective is to build an effective, well rounded, financially literate and diverse Board that operates in an atmosphere of candor and collaboration. We follow a 4-step process in reviewing board candidates. First, we have nominations from independent directors, from shareholders. We work with independent search firms, and we also have recommendations from the people of Goldman Sachs. This allows us to build a candidate pool who we then review in depth. We look at their qualifications. We obviously take diversity into consideration, we review their independence and measure potential for conflicts. We have meetings with each of the directors -- of the candidates, and then we consider their skills against the requirements we think are necessary to supervise a firm like Goldman Sachs. Finally, there is a recommendation made through the Governance Committee and the Governance Committee adopts the recommendation going forward. I will use the example of our most recent director, Vice Admiral Jan Tighe, to illustrate how we do this -- how we go about this process. As we looked at the skills on the Board, one of the areas where we thought we could use additional capabilities was in the area of cybersecurity and information technology. As you know, Jan Tighe has over 25 years of senior executive experience in each of these areas, and we were very fortunate that when she retired from the U.S. Navy, where she had been Deputy Chief of Naval Intelligence for Informational Technology, that she was available and she was interviewed, reviewed and ultimately she made the decision to join the Board of Directors. I hope that gives you a sense of how we look at new candidates for the Board. Thank you, David.

Thank you, Bayo. The next question comes from a shareholder. Which director received the highest votes today and which director received the lowest votes today? Thank you for that question. The preliminary results that Karen outlined, all directors received above 95%. The final results will be public and posted within 4 business days. The next question comes from a shareholder. How many shareholders are attending this meeting? To the best of my knowledge, at the current time, approximately 70 shareholders are attending this meeting. The next question comes from a shareholder. Is the vote regarding the amount of executive pay higher or lower than it was in 2019? As Karen Seymour stated, the preliminary say-on-pay vote is approximately 71%. Last year's result was 91%. We have continually received extremely positive feedback for our robust shareholder engagement. We are committed to continue to engage with shareholders going forward to make sure we understand their perspectives. The next question comes from Scott Shepard with the National Center for Public Policy Research. Goldman is refusing to take companies public unless they have at least 1 woman on their Board of Directors. While diversity can be good, the federal government and the courts as well as public opinion have always rejected hard quotas. Given how much Goldman Sachs benefited from the 2008 bailout and how much -- and other investment houses have benefited from fiscal and monetary government program since then, how can it justify establishing a quota requirement, which is surely discriminatory and would likely be ruled unconstitutional if taken by the government? So thank you for this question, Scott. We do not view this is a quota. Our objective is to add greater diversity of backgrounds, experiences and opinions to Board based on introducing individuals from underrepresented groups, which will ultimately change the operation and success of a company for better. We recognize that diversity has different meanings across different geographies. For the U.S. and Western Europe, we focus on traditionally underrepresented groups in these regions across various criteria, including gender, race, ethnicity, sexual orientation or gender identity. We representing -- suggesting that public companies have at least 1 diverse Board member is a small step, but a significant one. Our next question comes from [ John Haslam ]. What will be the effect of COVID-19 internationally upon the U.S. market? Well, COVID-19, John, is an international pandemic. Swift actions from governments and central banks globally have helped to mitigate the demand shock and have kept markets functioning relatively smoothly. Hopefully, those actions over time, as we get a better handle on the health care crisis, should allow for a faster recovery. Our economists predict a sharp but short economic contraction and a rebound in the second half. However, it's very difficult to forecast the time line and the magnitude of the economic recovery. And so we're prepared for a range of outcomes. And I think under all scenarios, it will take quite a bit of time for us to recover the economic decline that we've had because of this demand shock. The final question this morning comes from [ Gerald Matthews ]. The Carpenter Union Pensions Fund, and he's with the Carpenter Union's Pension Fund, with combined assets of $70 billion, and they have a collective ownership position of 716,000 shares of our company's common stock. As long-term shareholders, we appreciate the efforts of the company to address the difficulties faced by employees, customers, small businesses and other important stakeholders during COVID-19. The company has recently taken steps and made investments to grow the company's business in China and its capital markets. Could you address how the pace of Goldman Sachs growth in China might be impacted by market and trade turmoil associated with the pandemic? Thank you. So thank you, Mr. Matthews. The COVID-19 crisis is global in scale with virtually all economies seeing the same level of disruption. In Asia, we took a number of precautionary measures related to COVID-19 in China in late January and continued to involve to ensure the well-being of our people and our clients there. Globally, we executed on our business continuity plans to ensure clients have continuous access to well-functioning capital markets and also to financing. We remain committed to the international strategy we laid out at Investor Day, and we're hopeful that coordinated actions from world leaders will allow for swift resolution of the crisis. One important positive development, in March, we received regulatory approval to achieve the majority stake in our China securities joint venture. This is a significant milestone for the firm, an important evolution for our business in China, enabling us to advance our 5-year plan that we shared during Investor Day. Thank you all for your questions. We strongly value our engagement with all of our shareholders and stakeholders. Please reach out to our Investor Relations team if you have a question that didn't get addressed or if you have follow-up questions. Contact information for Investor Relations is on our website and is also listed in our proxy statement. This concludes our meeting. On behalf of the Board of Directors and the management team, I'd like to thank you all for joining us. Please stay safe and healthy. I hereby declare this meeting adjourned.